New Delhi: The Planning Commission on Tuesday said the biggest challenge before India is to improve investment climate, and the initiative taken by the government in setting up a review panel on GAAR has sent the right signal.

"Globally there is an environment that investors are nervous. It is very important that we should do the most we can to present a positive picture of our economic situation that we are welcoming foreign investors," Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

He was speaking to reporters after a meeting with Finance Minister P Chidambaram.

Ahluwalia further said the initiatives taken by the Prime Minister to set up a new committee on the controversial General Anti-Avoidance Rules (GAAR) has sent a signal which has been received well by the investors.

Introduction of GAAR, which was proposed by then Finance Minister Pranab Mukherjee in the Budget 2012-13 to check tax evasion, had triggered outrage by foreign investors following which its implementation was postponed till April 2013.

Later, Prime Minister Manmoham Singh set up an expert committee to address the concerns of investors and come out with report by September end.

On the concerns expressed by rating agencies on India's fiscal health, Ahluwalia said the government is taking steps to fast-track the infrastructure project clearances and come out with credible fiscal consolidation roadmap.

"On the issue of implementation of major projects, the govt will take appropriate measures...I do not think that we have high deficit, or we had. The real concern we have is that do we have credible policy," he said.

The Finance Minister had last week made it clear that his uppermost duty was to regain the confidence of all stakeholders.

"...Obviously, wherever necessary, our policies have to be modified or fine-tuned to meet the expectations of different stakeholders," Chidambaram had said.

He had also sought advice of former Finance Secretary Vijay Kelkar and two other experts to formulate fiscal consolidation roadmap.

The Centre's fiscal deficit has ballooned to 5.76 percent of GDP in the last fiscal on account of high fuel subsidy outgo. The government has not been able to decontrol diesel prices even after taking in-principle decision.

The Centre hopes to bring down the deficit to 5.1 percent of GDP in the current fiscal but the task seems difficult in view of rising oil, food and fertiliser subsidy bills.